Proximity strategies in outsourcing relations: the role of geographical, cultural and relational proximity in the European automotive industry

Alexander Schmitt and Johannes Van Biesebroeck

Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: Trends towards international fragmentation of production and modular process technologies have increased the importance of proximity in the supply chain of sophisticated manufactured goods. Using a rich and novel data set for the European automotive industry, we simultaneously evaluate the relative importance of geographical, cultural and relational proximity in sourcing strategies. The estimates indicate that each dimension provides an independent benefit and also which measures have the largest relative importance. We also find that the positive effects attributed to some measures reflect past relationships rather than predict new ones. In particular, co-location and a low cultural distance should be interpreted as outcomes of a sourcing strategy, not as predictors for sourcing success. We investigate to what extent firms from different countries follow different strategies and which choices suppliers can make to boost their attractiveness as outsourcing partner.

Date: 2013-02
New Economics Papers: this item is included in nep-cse, nep-eur, nep-geo and nep-ure
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Journal Article: Proximity strategies in outsourcing relations: The role of geographical, cultural and relational proximity in the European automotive industry (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:ces13.02

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